I’m a staff writer at Forbes covering real estate: from ultra-luxury homes to foreclosures to the people making the deals happen. Until recently, I was a member of our Forbes wealth team, crunching numbers for our Forbes 400 and World’s Billionaires lists. Before that I investigated a former Hell’s Angel for the City Pages of Minneapolis, trekked to the U.S.-Mexico border with the Minutemen for the Orange County Register, and exposed Michael Jackson’s property tax problems for the Santa Maria Times. A born and bred Westerner with strong ties in Minnesota, I love calling NYC home. Twitter: erin_carlyle. Got tips? Email me at ecarlyle@forbes.com.

Meet The Best Hardware Store In the Nation, And The Midwestern Billionaire Who Built It: John Menard Jr.

Four months before December a blue-shirted Menards employee at the hardware retailer’s flagship store in Eau Claire, Wis. surveys a display of artificial Christmas trees. A 7.5-foot spruce dolled up in faux snow towers over him as he takes a customer call. “Of course we sell safety goggles! This is Menards! We sell everything from diapers to deodorant,” he says.

And all at low prices, without feeling like a bargain-basement explosion. This is the formula: bright clean floors, neatly arranged product selection, employees who are knowledgeable and eager to help. The $7.9 billion (estimated 2012 sales) retailer–the largest private do-it-yourself chain in the nation, in sales behind only publicly traded $74.8 billion Home DepotHome Depot and $50.5 billion Lowe’s–was ranked the most customer-centric retailer among the competition by research firm Dunnhumby and may just be the best hardware store in the country.

That’s largely due to the vision–and authoritarian management–of 73-year-old founder John MenardMenard Jr., Wisconsin’s richest person (net worth: $7.5 billion, No. 57 on the latest Forbes 400). If our annual list of America’s Biggest Private Companies had a poster child, Menard, who owns 89% of the company, would be the guy.

While Menard tells FORBES that family members now run the company “along with some very competent and longtime professional management,” insiders say he still oversees even the smallest details, from the material for store parking lots to answering company mail. He’s never felt much pull to take his kingdom public. “We feel staying private is the right decision for our situation,” he says.

That’s understandable. Menard’s throwback style would be a rough fit for a public company. Everyone–including executives– is supposed to punch a time clock. Store managers are paid hourly but can make six figures with annual bonuses tied to performance. Managers must adhere to orders from corporate on everything from where to place merchandise to which product to use to clean store floors. A fleet of company inspectors flies out from Eau Claire to make sure stores toe the line, and Menard personally reads the reports. Managers who miss the mark get slapped with fines. “John at his core is driven on results,” says Tony Misura, a former Menards manager. “There are his objectives and his values, the way he perceives them, and there are no other rules other than results.”

Last year the retailer paid an undisclosed settlement to a 40-year veteran who claimed age discrimination after he turned 60 and was abruptly dismissed. A similar case involving a 34-year veteran is still open. The company continues to fight a former Menards attorney (the founder’s ex-girlfriend’s sister) who won $1.65 million after claiming gender discrimination and wrongful termination. And last year Menards agreed to pay $1 million in a class action launched by African-Americans claiming they were systematically denied promotions. “Keep Your Mouth Shut about any confidential company business,” reads a 2001-02 employee contract.

His bootstrap background explains a lot. Menard is the eldest of eight kids from Eau Claire. “We moved to a farm when I was 5 years old, and I grew up there,” he says. “Farm life is hard but a great atmosphere to grow up in.” He started out building agricultural structures in the area surrounding his hometown while he was a student at the University of Wisconsin-Eau Claire. He incorporated his business in 1962, the year after North Carolina-based Lowe’s went public. By the time he graduated in 1963 (with majors in math and business and a minor in psychology), he was making as much as IBMIBM offered him to join up, so he passed on a job to build his own business.

Menard began selling lumber left over from his building projects on Saturdays, when regular lumberyards were closed. He bought property with a railway spur and began buying directly from lumber carts rolling in from the West Coast. Eventually he augmented his inventory with shingles and nails, opening his first retail store in Eau Claire in 1964–14 years before Bernie Marcus and Arthur Blank founded Home Depot. By the early 1990s Menards had 78 store locations, and its founder stopped building sheds and focused entirely on retail.

Menards was the first DIY retailer to use a hub-and-spoke distribution system, sending out trucks from Eau Claire. “As Depot grew and Lowe’s grew, I don’t know if they copied the Wal-Mart plan or the Menards plan, because he certainly was doing it before they were,” says retail consultant John Cashmore. The company saved money by pressure-treating its own lumber and eventually added an entire manufacturing division: plants dedicated to prehung doors, truss manufacturing, steel roll forming, and nail and board packaging. In the summers he chopped up pallets and resold them as mulch; in Wisconsin’s cold winters he packed old, broken-down pallets into furnaces to heat the buildings at his company’s corporate headquarters. “He never wasted an inch of lumber,” says former Home Channel News editor Gary Ruderman.

The billionaire’s thrift also shaped the company’s growth pattern. Rather than race through the 1990s gobbling up smaller, collapsing players, as did Depot and Lowe’s, Menards mostly expanded organically, financing growth through the company’s own cash pile. Between 1990 and 1998 the company nearly doubled its number of stores; Home Depot increased its stores five times over in the same period to 761. Today Home Depot has 2,260 stores in the U.S., Canada, and Mexico. Menards is still regional: 279 stores in 14 states across the Midwest and Wyoming.

And while he may not be easy to work for, Menard’s control-freak, cost-saving ways do well by shoppers. Cashmore, the retail consultant, once compared Menards prices to rivals and found them lower on every single item –often by one penny. “Being private has many advantages,” says Anne Brouwer of McMillan Doolittle. “He doesn’t have the level of scrutiny or oversight to have to worry about. He can kind of run it the way he wants to run it.”

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